Swiss Re calls 1.1.2024 ‘market peak,’ now nat cat dependent for 2024
The reinsurance market has reached a sufficient level of balance to leave the 2024 outlook either highly stable to levels seen at January renewals or event-dependent on 2024 natural catastrophe, top officials at global reinsurer Swiss Re contend.
CEO Christian Mumenthaler (pictured) sees “clearly more capacity” than had been available one year ago, but “not necessarily” any attendant increase in demand, leaving the pending 2024 market developments “very much dependent on how the year goes.”
“If we have normal nat cat activity, I don't think we are going to have a lot of pressure downwards,” Mumenthaler told his company’s fourth quarter earnings call. “If it is a brilliant year, nothing happens, history would say there would be more pressure at the end of it.”
Swiss Re admitted to a 2% decline in inflation- and risk-adjusted pricing at the 1.1 reinsurance renewals, with a 9% gross price increase offset by an 11% increase in loss picks, a development which Swiss attributed half to inflation and half to other factors including model changes and other changes in assumptions.
With that easing of pricing, Mumenthaler calls 1.1.2024 “an orderly renewal at a market peak” and expects “similar trends in the rest of the year.”
The demand side has not kept pace with the clear rise in capacity, Mumenthaler said. Some clients who may have pared back more than they wanted in 2023 may proceed to some catch-up purchases, but others have let their retentions sale upwards and remain mindful of their budgets.
“Overall, we have not seen a huge spike in demand,” Mumenthaler said.
Terms achieved at 1.1 matched the group’s expectations and proved a fit to Swiss Re’s annual and mid-term financial targets, Mumenthaler insisted. Swiss Re holds “a reasonably well priced book of business,” CFO John Doyle added, claiming “no evidence” of any pending inflection point in the group’s combined ratio as a result of the renewal.
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